Intra-industry trade: An analysis of the United States' textile and apparel industry

Intra-industry trade is the simultaneous import and export of goods within the same industry. This study investigated the levels of intra-industry in the United States' textile and apparel industry, and determined the factors that influence intra-industry trade. The study focused on the United States' and 95 of its major trading partners in the textile and apparel industry. Using Grubel and Lloyd's intra-industry trade index (1971, 1975), intra-industry trade levels were estimated for 17 3-digit Standard International Trade Classification (SITC) categories. The index gives values between zero (total inter-industry trade), and one (complete intra-industry trade).;To investigate the determinants of intra-industry trade in the United States' textile and apparel industry, the level of intra-industry trade was the dependent variable. The independent variables included level of economic development, market size, trade imbalance, product differentiation, distance, trade barriers and commodity type. Nonlinear regression analyses were conducted for the following industries: (a) textile and apparel, (b) fiber, (c) fabric, and (d) apparel. In the textile and apparel analysis, the independent variables of level of economic development, market size, trade imbalance, product differentiation, distance, trade barriers and commodity type were significant. Level of economic development, market size, product differentiation, and distance were significant in the fiber analysis. For the fabric industry, level of economic development, market size, and product differentiation were significant. Finally, the variables of level of economic development, market size, trade imbalance, product differentiation, distance and trade barriers were significant in the apparel analysis. In each of the four analyses, all independent variables were negatively associated with levels of intra-industry trade except for product differentiation.